Merger and acquisition (M&A) activity is intensifying as companies seek to adapt their supply chains to major, global-market forces. Companies need to adapt to rapidly changing technologies and the blurring of traditional market channels, resulting in new, digitally-driven business models. Simultaneously, companies must adjust to contend with turbulent geopolitical forces and growing uncertainty about cross-border trade and tax policy, which have a direct impact on their businesses.
Amazon’s recent purchase of Whole Foods is a great example of a company turning to M&A to extend the strategic capabilities of their supply chain. The acquisition helped the online retailer build out its perishable-food supply chain at a time when the digital economy is transforming how people buy food, such as with online grocery shopping and home-delivered, meal-ingredient services. More importantly, Amazon’s supply chain can leverage Whole Food’s network of stores for “last mile delivery or pickup.” With 6% of American households within one mile of a Whole Foods store, the acquisition competitively bolsters Amazon’s strategic omni-channel capabilities. Going forward, companies will be looking to M&A events to fill the gaps in their supply chain capabilities, which address the needs of emerging business requirements.
The supply chain has always been at the heart of M&A events. Historically, the focus has been on increasing brand share, shedding redundant assets and fueling growth. Now, the focus is on improving innovation and operating model reimagination so companies can change the game to swiftly respond to digital and geopolitical market changes.
The new M&A-ready supply chain
Emerging responsibilities are drastically reshaping supply chain leaders’ roles from achieving operational and delivery excellence to becoming ecosystem orchestrators and business model innovators. Creating building-block, supply chain models – where units can be quickly added, shed and/or reconfigured for competitive advantage – is a key ability that will be crucial for leaders of cutting-edge supply chain organizations.
New analytics, such as supply chain network modeling with flexible cloud deployment and increased computing performance, are enabling supply chain leaders to model the financial and operational opportunities before and after the M&A event. This helps to realize the monetary and agility benefits in a shorter period of time.
Guidance for forward-thinking supply chain leaders
Make bold moves: M&A events present opportunities to make leapfrog changes. Rather than managing the slow and expensive trek of integrating systems and harmonizing processes, for instance, supply chain leaders may find that a nimbler service provider is a better choice. By combining network design and modeling with the growing number of third-party supply chain services firms, companies can quickly integrate the merged operations while simultaneously building an adaptive supply network that leverages market change as a competitive opportunity.